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Tips for reducing stress on yourself and business at 'tax time'


Tax season can be a particularly stressful time for individuals and business owners alike. But it goes without saying that business owners experience far higher levels of stress as compared to most employees.
If you are a business owner, you will have many important tasks on your plate, including the curtailing of expenses, keeping customers happy, and arranging startup finance, amongst many others.
Given all of the day-to-day running tasks that you will be overseeing, it is perfectly understandable that many business owners put off the administration that is required to satisfy the tax office. The gathering together of every document, and the filing of all those forms, can become a task that looms over you until the day when you can delay it no longer.
The following are some ways in which you can reduce the stress that you and your business experience during tax time:

Take advantage of new allowances

Airbnbers and eBayers have a good reason to be less stressed as they can now get a £1000 tax free allowance each financial year on trading income and property income. If you trade on both platforms, you are entitled to a £1000 allowance on each.
If, by renting out a room, land or property, you earn an annual gross income of £1000 or less, there is no absolutely no need for you to declare it on your tax return or tell HMRC about it.
Also, if your earnings from selling items on eBay, via classified ads or from casual jobs such as gardening or babysitting are £1000 or less, you do not need to make a declaration regarding the same to HMRC.

Claim for Expenses

If your work requires you to subscribe to newspapers or magazines, you shouldn’t refrain from claiming these as expenses. Expenses can also include any clothing that you use exclusively for work. A suit cannot be claimed for, despite being a type of clothing that you may wear to work everyday. It is only those outfits which have your work logo on them, or protective clothing and uniforms that you must buy yourself, that can be claimed for.

Charity Donations

Tax returns usually include declarations which pertain to the previous tax year. Gift Aid, however, helps you claim tax relief on donations which you make right up to the time when you file the return, which means the current tax year.
For those with spare cash, tax bills can be easily reduced for the current year by making donations to charity. If, due to some reason, you need to pay basic rate tax but want a higher rate of relief, you can do so by donating to charity.

Good Practices

According to HMRC, as many as 840,000 people failed to file their tax return by the deadline last year. Procrastination comes at a heavy price to such businesses and individuals, as they are required to pay unnecessary fines which they could have easily saved themselves if they had only been more organised.

       Put your paperwork in order

HMRC is implementing its Making Tax Digital scheme and therefore you must have all your paperwork sorted when you sit in front of the computer screen to start the online process.
This includes your P60 with details relating to your expenses, details relating to the money you earned from your business, pension payments and any Gift Aid payments. You should also gather details of your alternative sources of income, if there are any, such as shares, savings, royalties and rental income.
Having your important documents in one place and ready to view, reduces stress and also the possibility of making mistakes when the form is being filled online. If you have accountancy software, it can speed up your bookkeeping tasks which can save you a lot of your time and energy.
It usually comes with advanced functions such as file imports and automatic bank feeds which help you categorise transactions in a matter of few minutes. They also greatly reduce the scope of error. As a result, you pay the right amount of tax and you do not have to worry about being investigated by HMRC.

Stay on top of the books

Whilst completing your previous year’s tax return is always a cause for celebration, it shouldn’t mean that you immediately take your eye off the ball and stop maintaining your books for the current year. In fact, you should complete it on a regular basis as this will let you know how much money you have earned. This in turn can influence your decisions and determine how much tax you will need to pay later.
Having such practices will ensure that when tax time draws near, you are not completely unprepared. The price that you will have to pay for missing a deadline is £100 and the more you ignore it, the bigger the fine you need to pay.

Plan Ahead

Delaying this job comes with another disadvantage. As most taxpayers tend to put off this task until it cannot be delayed anymore, the HMRC system doesn’t operate at its optimum speed as there is a sudden surge in the number of users. Therefore, a good way to avoid this stress is to beat the rush and get done before others get around to doing it. That way, if you need to make an enquiry or get help, you are not battling against thousands of others also doing the same.
You must already have a fair clue as to which details you need to enter and you can make good use of this knowledge by making notes beforehand and being organised. If the responsibility of filing your tax return rests with an accountant, ensure that you give them sufficient time to put in place your tax paperwork.
In this way, you can make sure that they have plenty of time on their hands to work on your tax return and you can fit into their schedule to complete it. You should also keep in mind that accountants are usually very busy in January and may not have as much time for your enquiries during this period.
A strategy which can work brilliantly for you to prevent the tax season from becoming overly stressful for you and your business, is to select a quiet time and if possible submit it before the Christmas holidays kick in rather than doing it in mid-January.
If there is no sense of urgency attached to filing your tax return, you will experience much lower levels of stress than you would if you were in a race to complete a tax return with the rest of the UK, with just days or even hours to spare.
By following the above tips, you can easily make tax time far less stressful for you and your business.
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